Regulatory and tax changes are expected to hit online profit growth at gambling firm William Hill (WMH) with profits expected to fall by £20m in 2018 and a further £25m in 2019.
Shares in William Hill fell 4.1% to 204.9p on the profit warning just days after unveiling the £242m deal to buy European peer Mr Green.
This is hardly surprising considering the mounting pressure on the gambling sector as a regulatory crackdown bares its teeth, particularly in the UK.
The latest headwind is an increase in remote gaming duty from 15% to 21%.
Annual operating profit is expected to be between £225m to £245m on the assumption that normal gross win margins continue in the final weeks of 2018.
DOWNBEAT SHORT TERM TRADING
William Hill had been gaining traction in the US as the sports betting market opens up over there, and that's still the case with total net revenue up 29% in in 2018 (to 23 October).
But previously growing online betting seems to have hit the buffers more recently, with total net revenue since 30 June falling 5%.
Betting through high street shops remains as under pressure as it has for ages, although at least the pace of decline looks relatively stable at around 4%.
AJ Bell investment director Russ Mould makes the reasonable point that the profit warning has come in spite of all of the contributing factors being known to the market, implying analysts ‘were too optimistic.’
‘The only real new bits of information were weaker than expected football and racing margins, plus customers winning lots of bets on international fixtures in October,’ says Mould.
